Hello, and welcome, everyone joining today's Inotiv Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note, this call is being recorded. We are standing by if you should need any assistance. And it is now my pleasure to turn the meeting over to Steve Halper of LifeSci Advisors. Please go ahead.

Thank you, Claudia, and good afternoon. Thank you for joining today's quarterly call with Inotiv's management team. Before we begin, I'd like to remind everyone that some of the statements that management will make on this call are considered forward-looking statements, including statements about the company's future operating and financial results and plans. Such statements are subject to risks and uncertainties that could cause actual performance or achievements to be materially different from those projected. Any such statements represent management's expectations as of today's date. You should not place undue reliance on these forward-looking statements, and the company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events -- the company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the company's SEC filings for further guidance on this matter, including risks and uncertainties that could cause results to differ from forward-looking statements. Management will also discuss certain non-GAAP financial measures in an effort to provide additional information for investors. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in the company's earnings release, which has been posted to the Investors section of the company's website www.inotiv.com and is also available in the Form 8-K filed with the Securities and Exchange Commission. If you haven't obtained a copy of today's press release yet, you could do so by going to the Investors section of Inotiv's website. Joining us from the company this afternoon are Bob Leasure, President and Chief Executive Officer; and Beth Taylor, Chief Financial Officer. John Sagartz, Chief Strategy Officer, will join us for the question-and-answer portion of the call. Bob will begin with some opening remarks, which -- after which Beth will present a summary of the company's financial results for its fourth quarter and full year fiscal 2025 and then we'll open the call for questions. It's now my pleasure to turn the call over to Bob Leasure, CEO. Bob, please go ahead.

All right. Thank you, Steve. Good afternoon, everyone. During the fourth quarter of fiscal 2025, we saw the continuation of some positive trends for our business, including a strong year-over-year increase in demand for our Discovery & Safety Assessment business. We continue to execute on the core goals outlined in our May 2025 Investor Day, including improving our cash flow and margins and maintaining our focus on customer metrics. Two critical elements of our plan consists of improving DSA revenue and margins and continuing our RMS site consolidation efforts in order to further reduce cost. On today's call, I'll provide an update on the progress we are making on these objectives along with the other general business updates for the fourth quarter. On that last point, on August 18, we filed an 8-K disclosing that we became aware of a cybersecurity incident which caused disruption to certain of our business operations. We worked to restore availability and access to our networks and systems during this fiscal fourth quarter. We are required to work through a number of challenges that were disruptive to the business, but we continue to execute request for delivery of products and services. While this incident inevitably had some financial impact on the quarterly results, I'm very proud of how the team responded. And as you can see from the results of the quarter, the company maintained its momentum through this process. In September, we disclosed that we had engaged Perella Weinberg Partners to provide general financial advisory and investment banking services to assist the company in exploring potential debt refinancing alternatives. And then we later announced that a proposed settlement of our securities class action and an agreement in principle to settle the derivative lawsuits in each case pending court approval and expect that the settlement…

Thank you, Bob, and good afternoon, everyone. For the fourth quarter of fiscal 2025, total revenue was $138.1 million compared to $130.4 million in the fourth quarter of fiscal 2024. This was a $7.7 million or 5.9% increase in revenue from the prior year quarter, primarily driven by increased revenue of $7.1 million within our DSA segment. For fiscal 2025, total revenue was $513 million compared to $490.7 million in fiscal 2024. This was a $22.3 million or 4.5% increase in revenue from the prior year due to a $14.5 million or 4.7% increase in RMS revenue primarily driven by higher NHP product and service revenue and a $7.8 million or 4.3% increase in DSA revenue. DSA revenue in the fiscal 2025 fourth quarter was $51.6 million compared to $44.6 million in Q4 of fiscal 2024. The year-over-year 15.7% increase in DSA revenue was primarily driven by an increase in discovery and translational science services, biotherapeutics, general toxicology services and surgical services. DSA revenue for fiscal 2025 was $187.9 million compared to $180.1 million for fiscal year 2024. The year-over-year 4.3% increase in DSA revenue was primarily driven by an increase in safety assessment services, including biotherapeutic services, surgical services and general toxicology and an increase in discovery and translational science services. Additionally, the year-over-year increase in DSA revenue was driven by our improved performance over the last 6 months of the fiscal year. The book-to-bill ratio for DSA for the fourth quarter of fiscal 2025 was 1.08:1, and our trailing 12-month book-to-bill was 1.05:1. DSA backlog was $138.2 million at September 30, 2025, compared to $129.9 million at September 30, 2024, and $134.3 million at June 30, 2025. Overall, net new DSA awards this quarter were $54.2 million, a 61% increase over Q4 of fiscal 2024 and a trailing…

[Operator Instructions] And our first question comes from Frank Takkinen with Lake Street Capital Markets.

I was hoping I could start with one on -- one of your previous comments in the prepared remarks about some headwinds in the quarter. Look like really nice top line, really great bookings, maybe a little bit more expense in the model than expected. Can you maybe kind of parse out what some of those headwinds were and maybe what revenue would have been without those headwinds or what those incremental expenses were in the quarter to kind of give us a better feel for maybe what some of the extra expenses in the model were and kind of parse out what the quarter could have been maybe without some of the extra cybersecurity expenses in the model?

Yes. Well, Frank, you identified what the major headwind was for us in the early August finding out the cybersecurity incident we reported. That was probably the most -- major thing we faced. And we can quantify some of those things, a lot of overtime, a lot of communication, a lot of third-party cost and some studies and some work that may have been redone. But it's the intangible cost that you can't really identify the toll it takes on the operation or the customers or people may be holding back on issuing an award until you get through it. And so it's hard to quantify that. And what happened, if you would have asked me, do you think you could have increased our award 63% during a quarter or come close to the $54 million in awards we had, I would have never expected that. So I think we did a great job, but I think it would also be naive for us to think that it didn't have some impact on our earnings, our expenses and some of our awards, that would be hard for me to quantify. If we could quantify, I would. But I think it's really those intangible costs and the time it takes for organization to focus on that. As you can see, we're very focused on the client service, we're very focused on integration, we're very focused on IT integration. And so that's a lot of diversion of time and effort when you have to go through something like that. But I was very pleased how quickly we recovered. I was very pleased with our ability. We have had other times before when we've had other suppliers hit or that we've had to go manual on paper. So we try to be prepared, but no matter how prepared you are, there are always things that you're not -- you're never prepared for. But overall, I was very pleased with how we responded. But yes, it'd be naive to think that it did have some impact that is not really that quantifiable. But I think we're getting through it nicely. And as I look at the last quarter and I look at the first 2 months of this quarter, the quoting and the awards and -- are moving forward nicely. So I think we've gotten through that.

Got it. That's helpful. And then my second one was going to kind of follow up on your last sentence there. Just any quarter-to-date trends you're comfortable sharing would be great on -- as it relates to ordering patterns and then a refresh around kind of some seasonality. I think in the past, you've called out some of the holiday season has had some seasonality for kind of revenue recognition for the quarter. So anything you can help us understand as we think about [indiscernible] would be great.

Yes. Thank you. Our quarter ended December 30 is typically our weakest quarter during the holidays. We -- for a lot of research models and our diet between Thanksgiving and Christmas tends to be a slower time. There are probably less working days. Some of the universities in some places are down for the holidays. So we do tend to see this being our -- typically our weakest quarter. As far as quantifying, we're coming off 6 months -- the last 6 months of 12.5% DSA revenue, for us, is very important. As we go back to Investor Day, Frank, there are really two things that we're focused on. Costs coming out of the RMS business. We're not looking for a lot of major increase in sales, but costs coming out of the RMS business, we identified that $6 million or $7 million. And we talked about growing the DSA business and seeing incremental margins of 50-plus percent on that growth. And so seeing that 12% revenue -- increase in revenue over the last 6 months is encouraging. And we have an increase in awards of over 37% over the last 9 months. So that's -- I think last quarter, we say 63%, but it's coming off a very weak Q4 of last year. So -- but if we can maintain that awards increase of somewhere 25 -- 20% to 30%, and we can maintain the revenue increase of anything close to what we've experienced the last 2 quarters, then we're going to be pretty pleased with how things are going to go for us, I think, in the future. So I'm not seeing anything right now that says that we can't -- after these last 2 months, that can't -- it's not possible. I think that it would be helpful to see others in the industry, see some of those same tailwinds that we've seen. And I think some are starting to indicate they're starting to see that. I think that's very encouraging. For us, when the industry does well, we're obviously going to do even better. But we've had a great 9 months, no doubt about it. Very pleased, probably better than we thought we could have done. I think we're seeing the pricing stabilize quite a bit. And I think we're hopefully hearing other people now starting to see some of those same trends. And as we -- and that will be a huge help to us also.

We'll take our next question from Matt Hewitt with Craig-Hallum Capital Group.

Maybe first up, and I'm sure you're sick of talking about this since April, but with the FDA now announcing formal guidance regarding new approach methodologies and trying to pare back on the use of large animal models in toxicology studies, I'm just curious if you could remind us how you're positioned, maybe your exposure to monoclonal antibodies, anything along those lines.

Yes. Well, our revenue related to monoclonal antibodies is minimal, very small if any. And so we're not really worried about that. With the amount of quoting activity we have going on, that's not going to, I think, have an impact. We do sell a lot of research models and NHPs. I could not tell you how all of our customers use those NHPs. I've seen some others that we've reached out and talked to, and I don't think it they see any impact. I think what we saw in the guidance that they're providing is just that guidance. The customers are still going to make their own decisions about what they're going to require for safety assessment testing. And I don't know -- so this one thing is guidance. Second, what are our customers going to want to do before they put a drug into a human in terms of safety assessment. And so we've not seen a big change in that. And right now, I wouldn't see it having really any impact. But I think it was a positive that they were able to clarify what they came out and said in April. But still, it's guidance. It doesn't mean that's what people are going to do or not do because they're all going to make their own decisions of what is safe and what they want to do from a safety assessment standpoint.

That's super helpful. And then -- and I realize it's early in the pharma budget cycle as they start to look at '26. But as you talk to some of your partners, some of your customers about those budgets for next year, what are you hearing? I mean, is your sense that budgets are going to be flat to up next year? Any color on those lines would be helpful, too.

Well, right now, I think we are seeing, as we did last year, and we've seen so far this quarter an increase in the quoting that is meaningful. I would say this quarter, I think we'll see a substantial increase in quoting. I think we're -- and the closing also. So when it comes into next year, we're probably booking a little further out than we have for a while. And so I think that's encouraging. We also, I think over -- as we mature, again, we're a very young company. And I think what we're seeing is more of a reoccurring customer base. So a little bit more comfort in gaining our customers' confidence. We do a great job of delivery, and I think we see an increasing amount of reoccurring customers, which is also very encouraging. But right now, obviously, we're on a pretty good roll in the last 9 months. I don't see anything that's going to disrupt that. And I'd be very encouraged to start hearing as I think we started to hear others in the industry also identifying the same trends. So I don't have any more to add to that. I can't tell you what they're going to do next year. But right now, what we see so far this year and in the last 2 months is we haven't seen anything to dampen our optimism and our ability to see an increase in revenue next year.

No, that's good. And yes, congratulations. It hasn't been an easy environment. You guys have executed well the last few quarters. So congratulations on that.

[Operator Instructions] We'll move next to David Windley with Jefferies.

Bob, maybe another way to interrogate the DSA improvement in the environment would be to ask around your lead times. What -- how quickly can you start studies for clients and maybe flipping the coin, how quickly do clients want to start studies? And are you seeing any movement on that measure?

David, I guess some of that depends on studies. We typically in the DSA business, see our DSA business come in and start within weeks, not months. The larger animal safety assessment businesses tend to come in and -- with closer to a 3- to 9-month lead time. We have started a studies faster than that. But right now, we're operating -- our large animal safety assessment capacity is operating at a very high level of capacity at the moment. So I think we can generally see out a couple of quarters in terms of the large animal capacity and the usage of that capacity. But the -- for the discovery and for the smaller animals, we can generally start those much quicker.

Okay. Flipping to RMS, and Frank may have tried to get at this a little bit, but in your segment disclosures, margin was impacted sequentially. And I'm wondering, I guess, first of all, was the cyber event cost differentially impactful in the RMS segment versus DSA? Or I would kind of have thought that, that would have been at the corporate level, but just want to try to interrogate the moving parts in that RMS margin.

Well, the RMS margin for our small animals and diet business tend to be improving as we've reduced the number of sites we have by 60%. And I think that's becoming a bigger part of our margin story actually and that's improving. And I think we'll see that improve this year as those costs continue to come out. I believe that the -- in the NHP segment, sometimes that can differ based on the cost of the NHPs that we're bringing in. And so -- and some of the costs that relate to those NHPs. So I think we probably had a few -- a little bit higher cost maybe than we did in the prior quarter. So that's just based on spot market, sometimes what we're buying and selling for.

Okay. Maybe zooming out then, if I think about that RMS business, you've got a few different things going on, you just named a couple. But I'm wondering along a number of vertices, like how would you describe volume versus price in RMS, large animal versus small animal mix and then kind of models versus services. Again, you have kind of several different ways to think about the mix moving in that business. I wondered if you could shine a light into that for us. So volume versus price, large versus small animal. And then on the models versus services, I'm really digging at how is your animal services business in Texas developing?

Yes, volume versus price. The small animal business and the diet business, one of the reasons that it was important, we reduced the sites by 13 or by 60% is because that is a very fixed cost structure. So taking out the cost and maintaining volume definitely has -- allows us to improve our margins. And as volume goes up, that also -- and mainly fixed cost structure would help us quite a bit also. So I think we're seeing the margins improve and the diet and small animals because of that formula. As far as the Alice, Texas facility, you're right, that is -- we are buying and selling. We're also boarding and breeding and we have services. So the services business continues to grow as does the domestic breeding operation. And then some of the other margins come and go based on the demand in the market and what we're able to buy for and sell for. So -- and that has I think not -- the volatility of that market and that price has been a lot less than it has been in the last 2 or 3 years. I think it's become a lot more stable. But there are a lot of factors in there, and you start putting in tariffs and you have transportation, you have quarantine. Those are all factors that can also change your cost. For the most part, we've been able to pass along tariffs. But if we have extended quarantine, which we at times have, and -- or change in transportation costs, which we at times have, those can also impact those margins. So those are probably a little bit more variable. We're not seeing big swings, but we're seeing -- and which is -- if that's half of our RMS business, then we could see some swings in those margins as the others are constantly improving.

At this time, there are no further questions in queue. I will now turn the meeting back to Bob Leasure for any additional or closing remarks.

All right. Well, thank you, everyone. We are encouraged with these results and the recent growth we've seen with our DSA quoting awards over the last 2 quarters. And as this growth develops, we'll need to remain vigilant on delivering an exceptional experience, service and product for our clients. We made great progress on the financial goals we outlined during our Investor Day, and we're continuing to evaluate opportunities to further improve our balance sheet. As I said in the past, we are a much better company today than we have ever been in the past, and we still feel we have a plan for much further improvement in the future. Thank you, and have a good day.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.